Melbourne Man Pleads Guilty to Filing False Tax Returns
Orlando, Florida - United States Attorney Robert E. O'Neill announces today that Russell P. Gentile (41, Melbourne) pleaded guilty to two counts of filing false tax returns. Gentile faces a maximum penalty of three years in federal prison and a fine of $100,000 on each count.
According to the plea agreement, in 2001 and 2002 Gentile was the President and Chief Financial Officer of a web-based company, Studentcredit.com, Inc. (SCI), a Subchapter S corporation, along with 2 other partners. Gentile was responsible for all financial aspects of the business, including issuing payroll checks, withholding payroll taxes, and preparing and filing the payroll and income tax returns for the business. He prepared and timely filed with the Social Security Administration (SSA), accurate W-2s for all employees, including himself. Gentile also appropriately filed accurate corporate tax returns for SCI with the IRS, including Schedule Ks, “Shareholders Share of Income, Credits, Deductions, Etc.”
For tax years 2001 and 2002, Gentile prepared and filed W-2s with the SSA reporting his wage income as $122,946 and $108,429, respectively. For tax years 2001 and 2002 the Schedule Ks for SCI reported Gentile’s share of corporate profit as $61,460 and $941, respectively.
Gentile used a certified public accountant (CPA) to prepare his individual and corporate returns. The CPA hand delivered the returns to Gentile for him to file. Gentile discontinued using the CPA after 2002 for his individual 1040 returns, but continued to use him for the corporate returns.
Gentile did not file Form 1040 Individual Income Tax returns for tax years 2000 - 2008. The IRS initiated contact with Gentile regarding the lack of a Form1040 tax return for 2000. L. Scott Roberts, American Tax Consultants, responded on Gentile’s behalf, with a variety of arguments challenging the government’s legal authority to levy and collect income taxes. The matter was referred to an IRS Revenue agent in Melbourne for investigation and collection.
In December 2006, L. Scott Roberts was convicted in federal court, in Tampa, on conspiracy and tax fraud charges and sentenced to 4 years. Afterwards, Gentile became his own advocate, sending letters and material to the IRS contesting his obligation to pay income taxes.
In March 2004, Gentile bought a home in Melbourne, Florida. He used an unfiled copy of his 2002 return that accurately reported his SCI income as evidence of his income to support a mortgage loan application. In December 2005, the IRS sent a letter notifying him that a lien had been placed on his residence in Melbourne.
In January 2008, Gentile filed Form 1040 Individual Income Tax returns for tax years 2000 - 2006 with the IRS. Each return contained a declaration that the return was made under penalty of perjury. All the returns were signed by Gentile. The returns for 2001 and 2002 included Form 4852 - Substitute W-2, Wage and Tax Statement, and Form 1099-MISC. For all years on the Form 4852, Gentile reported his wage income as $0.00 and his 1099-Misc income as $0.00.
Gentile’s 1040 Individual Tax Return for 2001 reported, on Line 5, that his Taxable Income was $0. Gentile knew that he had taxable income of approximately $184,406, and that filing a false tax return was a violation of the law.
On Line 41 of his 1040 Individual Tax Return for 2002, Gentile reported that his Taxable Income was $0. Gentile knew that he had taxable income of approximately $109,370, and that filing a false tax return was a violation of the law.
This case was investigated by the Internal Revenue Service Criminal Investigation. It is being prosecuted by Assistant United States Attorney Bruce S. Ambrose.